PPP Deadline Extended Through May 2021
Mar 31, 2021
The PPP Extension Act of 2021 passed by Congress last Thursday has now been signed into law by President Biden. The PPP Extension Act of 2021 expands the Paycheck Protection Program (PPP) loan application due date two months from March 31, 2021, to May 31, 2021. With nearly 190,000 pending applications, the law provides small businesses and nonprofits 60 additional days to apply for the roughly $79 billion of funds remaining. This extension comes just two weeks after the American Rescue Plan (ARP) made several changes to the PPP, which we previously outlined here.
An additional provision of the Act allows the Small Business Administration (SBA) until June 30, 2021, to process lender applications.
Categories: COVID-19
How to Prepare For the Restaurant Revitalization Fund Opening
Mar 24, 2021
This story was updated on 4/1/21 to reflect a potential change in SBA requirements for the Restaurant Revitalization Fund (RRF). Restaurants will not be required to acquire a System of Award Management (SAM) number nor a D-U-N-S number as previously thought.
In a previous post, we examined the Restaurant Revitalization Fund (RRF) under the American Rescue Plan and outlined the program details, eligibility, and the qualifying uses for the funds. With more than $20 billion available for restaurant businesses of different sizes, we anticipate a high demand for RRF grants.
As the restaurant industry patiently awaits further guidance from the Small Business Administration (SBA), there are steps restaurant owners can take now to best prepare for the opening of the fund. We encourage you to take action now by:
Gathering your paperwork – Finally, you should begin compiling your receipts and financial statements to show your 2019 and 2020 revenues.
Unfortunately, as of the date of this advisory, the SBA’s application process is not yet open. Nonetheless, we expect the application to be available on the SBA’s website, and, once available, applications will be submitted directly through the SBA. It is important to keep in mind not everyone who applies for an RRF grant will receive funds. Much like the first round of PPP, funds will go fast. We highly recommend you take the steps above to best position your restaurant. If you have questions or need help, we are here!
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Kristin Metzger, CPA
Restaurant Practice Leader
kristin.metzger@wvco.com | 419.891.1040
Categories: COVID-19, Restaurant & Hospitality
Tax-Free Employer Contribution to Student Loan Debt Incentive
Mar 23, 2021
Statistics show that a mere 8% of employers offer some kind of student loan repayment option. While this is not a new phenomenon, bigger corporations like Google and Hulu recognize the value-add of such offering to attract and retain top talent. Recent changes to a CARES Act provision providing employers tax incentives if they offer student loan repayments has been making news. Similar to employer-sponsored retirement and health care plans, employers can contribute up to $5,250 toward an employee’s student loan balance (principal or interest) and the payment will be free from payroll and income tax under Section 2206 of the CARES Act. This temporary tax-free provision has now been extended for at least five years, and employers are starting to take notice.
Due to the pandemic, many employers are focusing efforts on employee wellbeing and financial stability. This opportunity benefits both sides: the employee doesn’t have to pay income tax on the $5,250 and the employer gets a tax deduction. Some employers have evaluated the benefit of providing annual raises or offering a contribution to student loan debt. Given the economic impact of the pandemic, some may prefer the latter. Especially with student loan interest suspended until September of this year.
If you are interested in taking advantage of this tax-free provision, employers who already maintain an educational assistance program will need to amend their program, and employers who do not already maintain such a program will need to adopt one. Developing a written plan that outlines: 1) how to notify employees of the program, 2) eligibility and, 3) benefits is a good place to start. If you have questions, please contact your William Vaughan Company advisor today.
Categories: COVID-19, Tax Planning
COVID-Related Fraud Risk on the Rise
Feb 19, 2021
Many small business owners do not believe their businesses can or will fall victim to occupational fraud. Due to this belief and budget restrictions, many small businesses do not make this a priority, which leaves them vulnerable.
According to the Association of Certified Fraud Examiners’ 2020 Report, financial statement fraud is the costliest type of occupational fraud affecting organizations. Financial statement fraud is not only costly from a fiscal standpoint, but it also impacts trust within the organization, the community, and with investors.
The rapid advance of COVID-19 has placed a significant strain on organizations and individuals alike. Donald R. Cressey’s fraud triangle theory includes the three major factors that are commonly present when financial statement fraud occurs: Pressure, Opportunity, and Rationalization.
Here is how COVID-19 has impacted these factors:
Pressure – Organizations are facing challenges never experienced before. COVID-19 has left many facing revenue loss, supply chain disruptions, and employee wellness concerns. All these factors, and more, are causing undue pressure to meet financial expectations.
Opportunity – While organizations are receiving state and federal funding to cope with the financial impact of COVID-19 disruption, there are dramatic shifts in operations with remote working and a reduction of in-office staff. This means internal controls are reduced and accessibility increased. These become prime opportunities for fraud.
Rationalization – Mounting stress impacts individual decision-making skills, leading people to rationalize actions they would otherwise regard unacceptable or illegal. Employees may rationalize they are “owed” financial support because of the work they do.
Some potential areas to consider when thinking about your organization include:
- Revenue recognition – The timing and amount of revenues recognized.
- Allowances and reserves – Changes in methodology and unusual adjustments.
- Valuations – Significant estimates used in projections, declining cash flows, and idle assets.
- Treatment of expenses – Expenses are recorded in the proper period.
- Disclosures – The adequacy and sufficiency of disclosures.
- Margins – Reasonableness of margins given the current year operations.
- Internal control – Opportunity for control override.
These are just a few of the common ways for financial statement fraud to occur. While we all work diligently to recover from the COVID-19 disruption, we need to be aware of the heightened risks and adjust our processes and tasks to monitor for this risk.
If your company needs assistance, William Vaughan is here to assist you.
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Juli Seiwert, CPA
419.891.1040 | juli.seiwert@wvco.com
Categories: Audit & Accounting, COVID-19
SBA Unveils New PPP Forgiveness Applications & Guidance
Jan 21, 2021
On Tuesday, the U.S. Small Business Administration (SBA) and Treasury released new PPP loan forgiveness guidance along with new forgiveness applications.
These applications include:
- PPP Loan Forgiveness Application Form 3508S – this new one-page application is for borrowers who received a PPP loan of $150,000 or less. While no supporting documentation is required to be submitted with the application, borrowers are advised to maintain payroll, nonpayroll, and other documents that could be requested during an SBA loan review or audit.
- Form 3508EZ – this streamlined application is for borrowers that meet certain safe harbors
- Form 3508 – the full application is for those who don’t qualify for using either of the previous two forms
- Form 3508D – this two-page document is to be submitted by certain individuals who are required to disclose a controlling interest in an entity applying for a PPP loan
Borrowers using Forms 3508 and 3508EZ must submit payroll and nonpayroll documentation when applying for loan forgiveness. The instructions included with these forms provide lists of the required documents.
In addition to the new forms, an interim final rule (IFR) was released which simplified previous loan forgiveness rules and integrated changes made by The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (P.L. 116-260) which provided an additional $248 billion of funding to the PPP and allowed for a second-draw.
The SBA also noted it had approved roughly 60,000 PPP loan applications submitted by nearly 3,000 lenders for over $5 billion from the program’s re-opening through Jan. 17.
As always, we encourage you to connect with your William Vaughan Company advisor with questions on how this may impact your individual circumstances, or check out our COVID-19 Resource Center for additional insights.
Categories: COVID-19